Dorina Marciano BSA501 04 Activity 1

 Jan 1, 201A
 3,000,000 loan
 600,000 annual principal payment
 8% interest
o 1 period = 0.92593
o 2 periods = 0.85734
o 3 periods = 0.79383

1. PV of expected future cash flows as of December 31, 201C?

Jan 1 201A 600,000
Jan 1 201B (600,000*.92593) 555,558
Jan 1 201C (600,000)*.85734) 514,404
PV = P1,669,962
2. Amount of loan impairment
CV (600,000*3yrs) = 1,800,000
PV of future cash flow = 1,669,962
Loan Impairment = P130,038

3. Amt of Interest income should be recognized for 201D?

Measurement of new receivable 1,669,962
x Interest Rate 8%
Interest Income = 133,596.96